Reviewing the annual reports of dozens of cryptocurrency institutions, summarizing the "Eight New Narratives" keywords for 2024

Written by: SoSo Value

Introduction

In 2023, the total market capitalization of cryptocurrencies saw a significant rebound, growing from $1 trillion at the beginning of the year to over $1.6 trillion by the end of the year. This is seen as a clear signal that the crypto market is emerging from the "crypto winter." In addition to the overall data, including market capitalization, showing a significant recovery, various sectors within the crypto industry have also experienced different "highlights."

Looking back at 2023, both the global macro context and the Web3 space were filled with uncertainties. Although the crypto market showed slight signs of recovery, the global macro economy still faced downward pressure, regional conflicts erupted suddenly, and cultural and consumption aspects were lackluster. Traditional industries were impacted to varying degrees. In the macro-connected Web3 space, the BTC spot ETF process accelerated, major events such as CZ's resignation under U.S. regulation and SBF's conviction marked a new era, and AI technology, represented by ChatGPT, began commercial use.

"Narrative" is a main thread driving the crypto industry, where investment institutions and the market create new narratives, and investors question and understand these narratives. Looking ahead to 2024, a review of annual reports from dozens of top crypto institutions shows that most institutions display an optimistic attitude towards the upcoming crypto market in 2024.

SoSo Value summarizes eight key narrative keywords you should know by interpreting these reports, starting from understanding the "narrative" and combining our insights, to help you position yourself for the anticipated "bull market" expected by institutions, while hoping readers can avoid the investment traps brought by market "uncertainty" and "reflexivity."

This report includes annual reports and articles from: a16z, Coinbase, Messari, Hashed, Matrixport, Spartan, Binance, Delphi Digital, Pantera, and others…

（Comparison of total crypto market capitalization and S&P 500 market capitalization｜Data from: https://alpha.sosovalue.xyz/）

Narrative Keyword One: Bitcoin Returns to Dominance and Ecological Wave

Key Institutions: Coinbase, Messari, Gemini, Hashed, Matrixport, Spartan…

Overall Tone: With support from policies and regulations, Bitcoin is increasingly favored by retail and institutional investors, leading the market recovery and returning to a dominant position. The approval of Bitcoin ETFs and the Bitcoin halving cycle will provide momentum for price increases, while the innovation wave of Ordinals and BRC-20 will reshape the Bitcoin ecosystem.

Crypto Institutions

Selected Views: Bitcoin Returns to Dominance and Ecological Wave

Coinbase

At least in the first half of 2024, institutional flow will be firmly anchored in Bitcoin. Unless a widely spread risk-averse environment triggers a strong demand for liquidity, Bitcoin can perform well even in a more challenging macroeconomic context;

Gemini

The approval of spot Bitcoin ETFs will allow U.S. investment funds to acquire Bitcoin, thus opening the $36.7 trillion retirement fund market to the crypto asset class. Historically, Bitcoin's price has seen parabolic increases in each period following the previous three halving events;

Matrixport

The U.S. Securities and Exchange Commission is expected to approve Bitcoin ETFs in January, with trading expected to begin in February or March. This event, along with the Bitcoin halving cycle, is anticipated to provide healthy momentum for the coming year;

Messari

Bitcoin tends to lead the recovery. Recently, Bitcoin's dominance has reached a multi-year high. In an ETF-driven rally (leading the rise) or under severe macro pressure (consolidating during the decline), Bitcoin's dominance is expected to return to 60%; clearly optimistic about Bitcoin but "pessimistic about Ethereum," Bitcoin's performance is expected to outperform Ethereum;

Hashed

The innovation wave of Ordinals and BRC-20 helps to re-examine the Bitcoin ecosystem, with related technologies representing a paradigm shift in the Bitcoin ecosystem;

Binance

The emergence of Ordinals and inscriptions has brought innovation to the Bitcoin ecosystem;

Spartan

The development of Bitcoin Layer 2 and the "speculative value" of BRC-20 can drive the development of the Bitcoin ecosystem;

The core narrative for 2024 will undoubtedly revolve around the most core asset in the crypto space—Bitcoin. Most institutions have dedicated significant space to predicting Bitcoin's development in the new year. The U.S.-compliant crypto exchange Coinbase stated in its year-end report that Bitcoin regained its dominant position in the crypto market in 2023, indicating that both retail and institutional investors are increasingly favoring Bitcoin;

1/ Regarding Bitcoin spot ETFs: In 2023, several well-known financial giants applied for spot Bitcoin ETFs in the U.S. Coinbase believes that the participation of financial giants will help validate and enhance the prospects of cryptocurrencies as an emerging asset class. At least in the first half of 2024, institutional flow will be firmly anchored in Bitcoin.

2/ The overall macro environment's impact on Bitcoin: Unless a widely spread risk-averse environment triggers a strong demand for liquidity, Bitcoin can perform well even in a more challenging macroeconomic context.

Similar to Coinbase's views, the exchange Gemini also stated in its research report that after the approval of the ETF, a large influx of capital into crypto is expected to drive prices up. At the same time, the approval of spot Bitcoin ETFs will allow U.S. investment funds to acquire Bitcoin, thus opening the $36.7 trillion retirement fund market to the crypto asset class. Regarding the timing of the halving, the halving event in April 2024 is approaching, and historically, Bitcoin's price has seen "parabolic increases" in each period following the previous three halving events.

The crypto financial institution Matrixport, which holds similar views, mentioned ETFs and the Bitcoin halving in its report predicting market trends for the first half of 2024. The institution expects the U.S. Securities and Exchange Commission to approve Bitcoin ETFs in January, with trading expected to begin in February or March. This event, along with the Bitcoin halving cycle, is anticipated to provide healthy momentum for the coming year.

Regarding Bitcoin's price and market capitalization, the crypto investment analysis firm Messari predicts that while it is difficult to forecast Bitcoin's trading position in the short term, its appeal is nearly indisputable over a longer time scale. The long-term argument for Bitcoin is straightforward. Everything is digitalizing. Bitcoin tends to lead the recovery. Recently, Bitcoin's dominance has reached a multi-year high. The institution bets that in an ETF-driven rally (leading the rise) or under severe macro pressure (consolidating during the decline), Bitcoin's dominance will return to 60%;

Regarding the latest BRC-20 ecological wave, the crypto exchange Binance mentioned in its year-end report that "the emergence of Ordinals and inscriptions has brought innovation to the Bitcoin ecosystem." The crypto investment institution Hashed provided a more specific analysis of the field, stating that "the innovation wave of Ordinals and BRC-20 helps to re-examine the Bitcoin ecosystem, with related technologies representing a paradigm shift in the Bitcoin ecosystem, showcasing the long-term sustainable potential of the most dominant, widely accepted, and secure blockchain."

Hashed predicts that the Bitcoin ecosystem will unfold like Ethereum's decentralized finance did in 2020. The infrastructure of the ecosystem includes lending markets, decentralized exchanges, bridges, aggregators, portfolio management, development tools, and tracking infrastructure, etc. Startups or protocols that help build tools for secure and flexible programming of Bitcoin, develop independent indexing infrastructure or wallets, aggregation systems, or even create native Bitcoin metaverses or NFT markets may have a significant impact in 2024. Regarding the technical doubts related to BRC-20, the crypto investment institution Spartan stated in its report that the development of Bitcoin Layer 2 and the "speculative value" of BRC-20 can drive the development of the Bitcoin ecosystem.

It is worth mentioning that the crypto investment analysis firm Messari clearly expresses optimism about Bitcoin but "holds a pessimistic attitude towards Ethereum." While it appreciates Ethereum and everything derived from it, the long-term investment case for ETH resembles that of Visa or JPMorgan. Due to institutional allocators' interest in digital gold as a "pure play," Bitcoin outperforms Ethereum in the realm of digital currencies.

（Comparison of total crypto market capitalization and Bitcoin market capitalization｜Data from: https://alpha.sosovalue.xyz/）

Narrative Keyword Two: AI and Web3 Ecosystem Continue to Integrate and Collide

Key Institutions: a16z, Messari, Spartan Group, Gemini

Overall Tone: With AI technologies represented by ChatGPT entering large-scale commercial use in 2023, what impact or shock does this have on the cryptocurrency field? Most institutions believe that AI will bring a better user experience to Web3 users and change the industry tracks of smart contracts, payments, code auditing, and more.

Crypto Institutions

Selected Views: AI and Web3 Ecosystem Continue to Integrate and Collide

a16z

The combination of AI and blockchain will democratize AI innovation through decentralized open-source crypto networks, making users safer. When AI becomes the game maker, cryptocurrencies provide security;

Messari

AI is excellent for cryptocurrencies. There is no need to overthink this;

Spartan

We will see more AI being used to enhance Web3 user experience and efficiency, as well as more blockchain technology being used as a moat and transparency layer for AI;

Gemini

AI innovation fundamentally changes smart contracts, supports secure data solutions, enables transparent large language models, and combats misinformation;

Hashed

The integration of AI and blockchain technology represents a synergy with great potential to reshape various industries;

The renowned investment institution a16z mentioned in its article "Some Things to Be Excited About in Crypto in 2024" that the combination of AI and blockchain will democratize AI innovation through decentralized open-source crypto networks, making users safer. At the same time, when AI becomes the game maker, cryptocurrencies provide security, such as AI generating legends, terrains, narratives, and logic for games, while Crypto provides understanding, diagnosis, and punishment capabilities when AI encounters problems. The crypto investment institution Spartan Group also stated that we will see more AI being used to enhance Web3 user experience and efficiency, as well as more blockchain technology being used as a moat and transparency layer for AI;

The crypto investment analysis firm Messari holds an optimistic view on the impact of AI on the cryptocurrency field, stating that there is no need to overthink this, "AI is excellent for cryptocurrencies. There is no need to overthink this, but Arthur Hayes (founder of BitMEX) published an article on this topic this summer that is worth noting. For any artificial intelligence, the two most critical factors are data and computing power. Therefore, it seems reasonable that 'artificial intelligence will trade a currency that maintains its purchasing power over time,' which perfectly describes Bitcoin;

Regarding the predicted changes AI will bring to technology and different industry tracks, the crypto exchange Gemini stated in its report, "AI innovation fundamentally changes smart contracts, supports secure data solutions, enables transparent large language models, and combats misinformation," specifically stating:

1/ Content Creation: The asymmetric ability of AI to create content exceeds human processing capacity, and soon people will default to assuming content is fake, relying on on-chain proof for verification;

2/ Payments: In the near future, most payments will be conducted on-chain by AI agents on behalf of people;

3/ Code Auditing: Code auditing companies will develop copilot versions for smart contract writers, allowing AI to assist in verifying the quality of smart contract code during creation (not just after creation);

It is noteworthy that the crypto investment institution Hashed believes that "the integration of AI and blockchain technology represents a synergy with great potential to reshape various industries." Regarding the content creation industry, the institution cites examples such as Midjourney and Stable Diffusion, which may become protocols similar to media versions of ChatGPT, where original content and IP holders can stake their assets (NFTs, game items, photos, papers, iconic designs, etc.) to prove ownership and originality, with a portion of the revenue generated from products distributed as loyalty compensation. This will alleviate the IP ownership issues of content generated by AI engines and open up new markets for content creators.

（Overview of some tokens in the AI field｜Data from: https://alpha.sosovalue.xyz/）

Narrative Keyword Three: Regional Regulation Becomes Clearer and More Competitive

Key Institutions: Coinbase, Gemini, Spartan

Overall Tone: The foundation for cryptocurrency regulation in 2024 will continue to be established, leading to clearer regulations and greater institutional participation in the crypto space. One of the bigger stories in 2024 will be the competition among jurisdictions to continue vying for top positions in the regulatory field.

Crypto Institutions

Selected Views: Regional Regulation Becomes Clearer and More Competitive

Coinbase

The foundation for cryptocurrency regulation in 2024 will continue to be established, leading to clearer regulations and greater institutional participation in the crypto space;

Gemini

One of the bigger stories in 2024 will be the continued competition among jurisdictions to vie for top positions, competing to become key hubs for digital assets and the future financial system;

Spartan

Some capital will flow to regulated exchanges and local exchanges, and liquidity will become more decentralized;

The U.S.-based crypto exchange Coinbase has always been at the forefront of U.S. regulation, thus having profound insights into regulation. The institution believes that the foundation for cryptocurrency regulation in 2024 will continue to be established, leading to clearer regulations and greater institutional participation in the crypto space. However, analyzing both the negative and positive sides of U.S. regulation, on one hand, the institution believes that "the uncertainty in the U.S. is fueling missed opportunities," while the positive side is that the approval of Bitcoin spot ETFs in the U.S. may expand access to cryptocurrencies for new categories of investors and reshape the market in unprecedented ways.

Not only will the foundation of regulation be established, but the global regulatory landscape will also be filled with competition. The crypto exchange Gemini stated in its report that "one of the bigger stories in 2024 will be the continued competition among jurisdictions to vie for top positions, competing to become key hubs for digital assets and the future financial system." Countries such as the UK, EU, UAE, Japan, Hong Kong, and Singapore have recognized this and will continue to compete, aiming to attract business growth and innovation by having the most credible regulatory frameworks.

Will regulation also bring negative impacts? The crypto investment institution Spartan worries that regional regulation may affect overall liquidity in the crypto market, stating that "some capital will flow to regulated exchanges and local exchanges, and liquidity will become more decentralized."

Narrative Keyword Four: DePIN Sector Has Huge Development Potential

Key Institutions: Coinbase, Messari, Spartan, Pantera

Overall Tone: DePIN is one of the potential sectors favored by several crypto institutions, as it is believed to have the potential for large-scale adoption; it is also believed that "projects utilizing crypto economics to reduce structural costs will be strong competitors to existing Web2 businesses."

Crypto Institutions

Selected Views: DePIN Sector Has Huge Development Potential

Coinbase

DePIN has great development potential, and one of the major themes in 2024 is "the decentralization of real-world resources";

Messari

To eliminate risks from large tech platforms, a 1% "insurance fee" could lead to a tenfold increase in DePIN utilization;

Spartan

Projects utilizing crypto economics to reduce structural costs will be strong competitors to existing Web2 businesses;

Pantera

DePIN is a consumer-facing application layer, similar to DeFi, gaming, and social, with the potential for large-scale adoption and the possibility of driving consumer demand for underlying chains or ecosystems;

Crypto investment institution Pantera partner Paul Veradittakit wrote in an article discussing the DePIN sector that the development of DePIN over the past year has had a significant impact and meaning for the entire blockchain ecosystem. One of the most important reasons is that "DePIN is a consumer-facing application layer, similar to DeFi, gaming, and social, with the potential for large-scale adoption and the possibility of driving consumer demand for underlying chains or ecosystems."

From a broader industry perspective, Coinbase believes that "DePIN has great development potential, and in the future, blockchain technology will play a core role in managing and allocating real resources." One of the major themes in 2024 is "the decentralization of real-world resources."

In the report, Coinbase specifically mentions the concept of DeComp (distributed computing), which is a specific extension of DePIN that relies on a distributed computer network to complete specific tasks. It predicts that this concept will be revitalized due to the large-scale adoption of generative AI, as training AI models can be computationally expensive, and the industry is exploring whether there are opportunities to alleviate this issue through decentralized solutions.

When mentioning DePIN, one cannot overlook the traditional cloud infrastructure sector. Messari states that cloud infrastructure services represent a $5 trillion market in the traditional market, while DePIN only accounts for 0.1% of that. Even assuming that 0% of online services adopt DePIN as their primary stack, the demand for decentralized redundancy alone could lead to a surge in demand. To eliminate risks from large tech platforms, a 1% "insurance fee" could lead to a tenfold increase in DePIN utilization. It doesn't take much to change the status quo, especially with the AI-driven demand for GPUs and computing resources.

Holding similar views, Spartan believes that "projects utilizing crypto economics to reduce structural costs will be strong competitors to existing Web2 businesses."

(Overview of some tokens in the DePIN field｜Data from: https://alpha.sosovalue.xyz/)

Narrative Keyword Five: Tokenization of RWA Will Become an Important Part of the New Market Cycle

Key Institutions: Coinbase, Hashed

Overall Tone: It is expected that tokenization will become an important part of the new crypto market cycle, expanding from the currently dominant bond market to other market instruments in 2024, including stocks, private market funds, insurance, and carbon credits, with significant opportunities in projects exploring derivatives tokenization and securitization.

Crypto Institutions

Selected Views: Tokenization of RWA Will Become an Important Part of the New Market Cycle

Hashed

RWA and equity tokens may lay the foundation for the next generation of financial systems, with significant opportunities in projects exploring derivatives tokenization and securitization;

Coinbase

It is expected that tokenization will become an important part of the new crypto market cycle, expanding from the currently dominant bond market to other market instruments, including stocks, private market funds, insurance, and carbon credits;

The crypto investment institution Hashed believes in its report that "RWA and equity tokens may lay the foundation for the next generation of financial systems." The institution states that the current market is primarily focused on products related to U.S. Treasury bonds and the tokenization of underlying assets, but there are significant opportunities in exploring projects such as derivatives tokenization and securitization.

Regarding investment philosophy in this field, Hashed states that the evaluation of related projects will also include regulatory factors such as compliance, risk management, and due diligence, as well as operational factors such as efficient deposit and withdrawal processes, market accessibility, and scalability. Tokenization of RWA is crucial for bridging the gap between decentralized finance and traditional finance, laying the foundation for a more integrated and resilient financial ecosystem.

The crypto exchange Coinbase will explore the significance of tokenization, category expansion, and development in conjunction with regulation in its report:

1/ Tokenization is an important use case for traditional financial institutions, and it is expected to become an important part of the new crypto market cycle;

2/ Category Expansion: In 2024, we may see tokenization expand to other market instruments (currently mainly in the bond market), including stocks, private market funds, insurance, and carbon credits, as clients' demand for high-yield products and diversified sources of income is increasing;

3/ Integration with Regulation: It is noteworthy the regulatory progress made by jurisdictions such as Singapore, the EU, and the UK. The Monetary Authority of Singapore sponsors "Project Guardian," which has generated dozens of proof-of-concept tokenization projects on public and private blockchains of global tier-one financial institutions. The EU's DLT pilot regime has developed a framework to enable multilateral trading facilities to utilize a blockchain for trade execution and settlement instead of through central securities depositories. The UK has also launched a pilot regime seeking to provide a more advanced framework for issuing tokenized assets on public networks;

Narrative Keyword Six: SocialFi and Web3 Social Applications Gain Further Attention

Key Institutions: Binance, Spartan

Overall Tone: The emergence of friend.tech in 2023 has attracted industry attention, and crypto institutions predict that this is just the beginning. Web3 social applications, represented by SocialFi, will gain further attention, marking a significant shift in the industry's focus towards consumers and social applications.

Crypto Institutions

Selected Views: SocialFi and Web3 Social Applications Gain Further Attention

Binance

friend.tech demonstrates the potential of Web3 social applications. In 2024, the ability of SocialFi to gain further attention will define the form of social interaction on Web3 in the coming years.

Spartan

friend.tech is just the beginning; this trend marks a significant shift in the industry's focus towards consumers and social applications;

The crypto exchange Binance pointed out in its report that the attention generated by friend.tech, especially from influencers outside the cryptocurrency field, demonstrates the potential of Web3 social applications. In 2024, the ability of SocialFi to gain further attention will define the form of social interaction on Web3 in the coming years. The crypto institution Spartan also discussed the explosion of friend.tech, along with the potential airdrops that may occur in the coming year, which have already triggered a surge in imitation projects, stating, "this is just the beginning; this trend marks a significant shift in the industry's focus towards consumers and social applications."

（Overview of some tokens in the SocialFi field｜Data from: https://alpha.sosovalue.xyz/）

Narrative Keyword Seven: Decentralized Science (Desci) Becomes a Strong Use Case

Key Institutions: Spartan, Messari

Overall Tone: Decentralized Science (Desci) will gain more attention as a strong use case for blockchain in 2024, where the incentive mechanisms of cryptocurrencies are meaningful.

Crypto Institutions

Selected Views: Decentralized Science (Desci) Becomes a Strong Use Case

Messari

In the decentralized science (Desci) market, the incentive mechanisms of cryptocurrencies are meaningful;

Spartan

Decentralized Science (Desci) will gain more attention as a strong use case for blockchain in 2024;

The crypto institution Messari mentioned decentralized science (Desci) in the last paragraph of its year-end report, stating that the projects covered by this concept are still in their early stages, with 50% of the DeSci projects it tracks established in the past year. In this market, the incentive mechanisms of cryptocurrencies are meaningful. To scale, token sales and DAOs aim to fundamentally change the way research is conducted, and the interest in longevity, rare disease treatments, and space exploration is significant enough to drive the development of this field. Meanwhile, the crypto institution Spartan predicts that decentralized science (Desci) will gain more attention as a strong use case for blockchain in 2024, emphasizing the establishment of secure and durable records of scientific contributions using Web3 technology, thereby enabling fair credit distribution, simplifying transactions, allowing global resource sharing, and overcoming economic barriers.

Narrative Keyword Eight: GameFi Sector Will Transition to Play-and-Earn, NFTs Become Brand Assets

Key Institutions: a16z

Overall Tone: Regarding the GameFi sector, a16z's narrative predictions are particularly noteworthy. The institution states that in 2024, the GameFi sector will transition from Play-and-Earn (P2E) to Play-and-Earn, while NFTs will become brand assets, with more well-known brands bringing digital assets into the mainstream consumer market through NFTs.

Crypto Institutions

Selected Views: GameFi Sector Will Transition to Play-and-Earn, NFTs Become Brand Assets

a16z

1/ In 2024, the GameFi sector will transition from Play-and-Earn (P2E) to Play-and-Earn;

2/ NFTs will become ubiquitous brand assets, with more well-known brands bringing digital assets into the mainstream consumer market through NFTs;

In its nine major predictions for the 2024 crypto market, a16z mentioned the prediction for the GameFi sector, where the once-popular concept of "Play to earn" has transformed into "Play and earn." a16z believes that what the gaming industry truly needs are games that can attract players while allowing them to gain more value. The transition from Play-and-Earn (P2E) to Play-and-Earn establishes a significant distinction between gaming and "work (gold farming)." Additionally, Messari also stated in its report that the current market size of the gaming industry is approximately $250 billion, with expectations for significant growth. For the gaming industry, the added value of utilizing Web3 architecture lies in its "potential to improve user acquisition and retention," but so far, this remains an unproven argument.

a16z also mentioned in its report the prediction regarding the NFT sector, stating that "NFTs will become ubiquitous brand assets, with more well-known brands bringing digital assets into the mainstream consumer market." With custodial wallets and low transaction costs on L2 networks, conditions are being created for the widespread adoption of NFTs as digital brand assets for broader companies and communities.

（Overview of some tokens in the GameFi field｜Data from: https://alpha.sosovalue.xyz/）